Practicing fiscal responsibility
By Lt. Col. Cory Peterson, Air War College student
/ Published March 01, 2013
MAXWELL AIR FORCE BASE, Ala. - -- The continually increasing debt is the biggest threat we have to our national security." These were the words of Adm. Michael Mullen, former chairman of the Joints Chiefs of Staff. With sequestration looming and a national debt that tops $16 trillion, there is no question that the United States military will be forced to drastically cut spending in the very near term. The solutions to this fiscal challenge are to empower junior leaders through mission command-style direction and incentivize cost savings, neither of which is being done today.
The United States is on the eve of a congressional mandated budget sequestration, which is scheduled to eliminate nearly $500 billion from the pentagon's budget during the next 10 years. Regardless of if this law goes into effect today, the fact remains that America must address its $16 trillion debt, which affects every governmental agency to differing degrees.
The Department of Defense has issued guidance directing the services to begin planning and executing cost saving measures to address the looming cuts. Even if Congress manages to avoid sequestration, the DOD still must reduce spending in light of a continuing resolution and post 9/11 operations until our national debt no longer remains a source of national insecurity.
Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey stated in his April 1, 2012, white paper: " ... mission command is critical to our future success in defending the nation." Mission command is, in general, the use of mission-type orders to communicate the commander's intent to all echelons of his organization, not just his immediate subordinates. Mission command effectively provides the lowest echelon forces with the commander's intent so that they may exploit opportunity for success in every tactical engagement. Using mission command principles, commanders ensure all friendly-force actors share a common understanding of the end state and are empowered to achieve his goals with a minimum of stove-piped bureaucracy. Stove-piping hurts an organization when commander's intents are interpreted and disseminated from higher to subordinate commands.
Concerning budgetary savings, mission command implies that the lowest echelon commanders should begin executing cost saving measures to help mitigate over-spending. Unfortunately, this type of followership is not possible under current U.S. spending rules.
The DOD is given annual spending appropriations or, in absence of government shutdown, must operate under continuing resolution authority, which usually is based on previous year's funding levels. For the operations and maintenance accounts, which make up about 40 percent of the Air Force budget, we are expected to execute that year's money before the end of the fiscal year each September. Money not executed by Sept. 30 is "lost" to the organization and may no longer be obligated for new requirements. This system creates a spending spree each fall when commanders are encouraged to expend all remaining funds on travel and supplies. Windfalls of money come down from higher headquarters as they reshuffle organizational allotments to deplete every last penny. The same holds true in the service flying-hour programs where every flight hour is tallied down to the nearest six-minute increment, and sorties are flown even if all annual training requirements have been completed.
The reason for both is the same - commanders are encouraged to "spend-out" their annual budgets, and there is a general concern that if one fails to execute the full amount then their follow-on year's budget will be decreased. All of this makes savings a near impossibility.
What then to do? While reducing spending and the national debt is clearly a goal, the budgetary process does not incentivize saving and, in fact, frowns on those who do not spend what they are allotted. There are many possible fixes to this problem.
One solution is to allow individual units to maintain an emergency fund that would be made up of what wasn't spent the year prior. This would require multi-year executable funds but would likely end up in the same situation at the end of the second year when all excess funds, less the emergency, would need to be spent.
A more intelligent solution, tied to the debt being a source of national insecurity, is for the DOD to incentivize savings at all echelons of command by encouraging commanders to return unused dollars and flight hours to pay off the national debt. Clearly, commanders would be held accountable to executing their budgets in a conscientious manner and ensuring that all defense requirements were met, but budgetary savings would contribute to national defense through the reduction of the national debt and commanders would be encouraged to be more cost effective. This course of action would certainly require drastic changes to the way we manage our budget resources; however, during these austere times drastic change may be what is needed. This recommendation would, likewise, make it clear that less waste would be tolerated from end of fiscal year purchasing.
It is clear that something must be done to reduce the debt that threatens our national security. The DOD's guidance to execute cost savings measures will have to be met by large-program changes rather than small-unit fiscal responsibility. In order to fully realize fiscal responsibility, the processes by which the services execute spending must be updated so commanders may begin to truly scrutinize what is mission-critical to our national defense spending.
The views expressed in this article are those of the author and do not reflect the official policy or position of the U.S. government of Department of Defense.